2021 Colorado Code
Title 5 - Consumer Credit Code
Article 20 - Colorado Student Loan Servicers
Part 1 - Colorado Student Loans
§ 5-20-108. Affirmative Acts Required of Student Loan Servicers - Definitions

1. Except as otherwise provided in federal law, federal student education loan agreements, or a contract between the federal government and a student loan servicer, a student loan servicer shall take the actions specified in this section.
2. 1. A student loan servicer shall respond to a written inquiry from a student loan borrower, the representative of a student loan borrower, or the student loan ombudsperson within ten business days after receipt of the request and, within thirty business days after receipt of the request, provide information relating to the request and, if applicable, the action the student loan servicer will take to correct the account or an explanation for the student loan servicer's position that the borrower's account is correct.
   2. The thirty-day period described in subsection (2)(a) of this section may be extended for not more than fifteen days if, before the end of the thirty-day period, the student loan servicer notifies the borrower, the borrower's representative, or the ombudsperson, as applicable, of the extension and the reasons for the delay in responding.
   3. After receipt of a written request related to a dispute on a borrower's payment on a student education loan, a student loan servicer shall not, for the sixty days following receipt, furnish adverse information to a consumer reporting agency regarding a payment that is the subject of the written inquiry.

3. 1. Except as provided in federal law or required by a student loan agreement, a student loan servicer shall inquire of a borrower how to apply an overpayment to a student education loan. A borrower's direction on how to apply an overpayment to a student education loan stays in effect for any future overpayments during the term of a student education loan until the borrower provides different directions.
   2. For purposes of this subsection (3), “overpayment” means a payment on a student education loan in excess of the monthly amount due from a borrower on a student education loan, also commonly referred to as a prepayment.

4. 1. A student loan servicer shall apply partial payments in a manner that minimizes late fees and negative credit reporting. Where loans on a borrower's student loan account have an equal level of delinquency, a student loan servicer shall apply partial payments to satisfy as many individual loan payments as possible on a borrower's account.
   2. For purposes of this subsection (4), “partial payment” means a payment on a student loan account that contains multiple individual loans in an amount less than the amount necessary to satisfy the outstanding payment due on all loans in the student loan account, also commonly referred to as an underpayment.

5. In the event of the sale, assignment, or other transfer of the servicing of a student education loan that results in a change in the identity of the person to whom a student loan borrower is required to send payments or direct any communication concerning the student education loan, the following provisions apply:
   1. As a condition of a sale, an assignment, or any other transfer of the servicing of a student education loan, a student loan servicer shall require the new student loan servicer to honor all benefits originally represented as available to a student loan borrower during the repayment of the student education loan and preserve the availability of the benefits, including any benefits for which the student loan borrower has not yet qualified. If a student loan servicer is not also the loan holder or is not acting on behalf of the loan holder, the student loan servicer satisfies the requirement established by this subsection (5)(a) by providing the new student loan servicer with information necessary for the new student loan servicer to honor all benefits originally represented as available to a student loan borrower during the repayment of the student education loan and preserve the availability of the benefits, including any benefits for which the student loan borrower has not yet qualified.
   2. A student loan servicer shall transfer to the new student loan servicer all records regarding the student loan borrower, the account of the student loan borrower, and the student education loan of the student loan borrower.
   3. The records required under subsection (5)(b) of this section include the repayment status of the student loan borrower and any benefits associated with the student education loan of the student loan borrower.
   4. The student loan servicer shall complete the transfer of records required under subsection (5)(b) of this section within forty-five days after the sale, assignment, or other transfer of the servicing of a student education loan.
   5. The parties shall notify affected student loan borrowers of the sale, assignment, or other transfer of the servicing of a student education loan at least seven days before the next payment on the loan is due. The notice must include:
      1. The identity of the new student loan servicer;
      2. The effective date of the transfer of the student loan borrower's student education loan to the new student loan servicer;
      3. The date on which the existing student loan servicer will no longer accept payments; and
      4. The contact information for the new student loan servicer.

6. A student loan servicer that services a student education loan shall adopt policies and procedures to verify that the student loan servicer has received all records regarding the student loan borrower, the account of the student loan borrower, and the student education loan of the student loan borrower, including the repayment status of the student loan borrower and any benefits associated with the student education loan of the student loan borrower.

History. Source: L. 2019: Entire article added,(SB 19-002), ch. 157, p. 1865, § 2, effective August 2.